Unilever delivers profit beat despite disappointing sales

Unilever beat first-half profit expectations on Thursday boosted by resilient pricing even as sales growth disappointed.

Shares in the maker of Dove soap and Hellmann’s condiments rose 6.8% in early trade to the top of London’s FTSE 100 index.

Unilever posted a 3.9% rise in second-quarter underlying sales, below the 4.2% increase expected by analysts in a company-compiled consensus.

It maintained its full-year underlying sales growth forecast of 3% to 5%, mostly driven by volume, while its forecast for an underlying operating margin of at least 18% was stronger than the market view.

Switzerland’s Nestle also reported lower than expected half-year sales growth on Thursday and lowered its full year outlook.

“There is much to do, but we remain focused on transforming Unilever into a consistently higher performing business,” CEO Hein Schumacher said in a statement.

After a protracted global cost of living crisis, some consumer goods makers have been easing their price increases, hoping to attract back shoppers who traded down to cheaper, often private label products.

Unilever’s underlying price growth for the quarter was less than expected at 1%, but underlying volume sales growth ran ahead of estimates at 2.9%.

The industry has struggled with soaring costs for several years, with everything from sunflower oil and shipping to packaging, grain and energy becoming more expensive during and in the wake of the pandemic and Russia’s invasion of Ukraine.

Unilever’s underlying operating profit rose 17% to 6.1 billion euros ($6.61 billion) for the six months to June, beating market expectations of 5.44 billion euros.

Its underlying operating margin widened 250 basis points to 19.6%, although the company expects that to slow in the second half.